Does a Child Need a Life Insurance Policy?

| January 23, 2011

The last thing any parent wants to think of is something happening to their child. However, with child life insurance it’s better to have and not need than need and not have.

When shopping around for the best possible quotes for life insurance, most people don’t consider a life insurance policy for their children. After all, children are young, healthy and you hope and pray they will be around to give you even more gray hairs than they’ve given you already. Unfortunately, things do happen and as a responsible parent you need to hope for the best and prepare for the worst. That’s where a life insurance policy can help.

The question still remains: Do you really need to purchase a life insurance policy for your child?

In certain situations it makes absolute sense to buy a life insurance policy for a child. An example would be if your child were the major breadwinner in the family. For those parents who have given up their careers to ensure their children are big movie and/or music stars, it makes sense. The family’s entire financial future is resting upon the shoulders of the child.Child

However, if your child is really more of an expense than an income earner (as most children are), there are other reasons for you to purchase life insurance for them. Here are a few:

Future Life Insurance Premium Protection

Buying life insurance for your child now will help them when purchasing life insurance in the future. Certain genetic traits that run in a family may preclude the child from obtaining life insurance in later years. Purchasing a policy now, while the child is young and healthy, can protect their future by locking into a more affordable rate now.

Whole Life Insurance policies Investment Option

The younger the policyholder, the lower the premium. Purchasing a child life policy on a young child will allow the policy value to start growing early and potentially providing cash value to borrow against later in life.

Life Insurance: Burial Costs

If, for some unforeseen reason, something does happen to your child, the immense grief is somewhat assuaged by not having to worry about where the money will come from to pay for the funeral and burial costs.

Alternatives to purchasing a separate child life policy:

  1. If you currently have a life insurance policy, you may purchase a Child Term Rider to extend coverage to cover your child/children. This coverage continues until the child reaches a predetermined age (usually anywhere from 21 up to age 25).
  2. There is also the school of thought that instead of paying premiums to an insurance company why not takes the same money and put it away in a Roth IRA or other investment option. Although that is a viable option, unexpectedly withdrawing money from certain types of accounts may incur heavy penalties and fees.

This is a sensitive topic, but as parents, child life insurance is something to research, investigate and consider.

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Category: Insurance, Life

About the Author ()

Felicia A. Williams is a wife, mother, freelance writer and owner of Tidbits About Money.

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